Correlation Between Quipt Home and Lycos Energy

Can any of the company-specific risk be diversified away by investing in both Quipt Home and Lycos Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Quipt Home and Lycos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quipt Home Medical and Lycos Energy, you can compare the effects of market volatilities on Quipt Home and Lycos Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Quipt Home with a short position of Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quipt Home and Lycos Energy.

Diversification Opportunities for Quipt Home and Lycos Energy

-0.28

Correlation Coefficient

Quipt Home  Lycos Energy

Very good diversification

The 3 months correlation between Quipt and Lycos is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Quipt Home Medical and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos Energy and Quipt Home is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Quipt Home Medical are associated (or correlated) with Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Quipt Home i.e., Quipt Home and Lycos Energy go up and down completely randomly.

Pair Corralation between Quipt Home and Lycos Energy

Assuming the 90 days trading horizon Quipt Home Medical is expected to under-perform the Lycos Energy. But the stock apears to be less risky and, when comparing its historical volatility, Quipt Home Medical is 14.78 times less risky than Lycos Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Lycos Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  424.00  in Lycos Energy on October 11, 2024 and sell it today you would lose (171.00) from holding Lycos Energy or give up 40.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Quipt Home Medical  vs.  Lycos Energy

Quipt Home Medical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quipt Home Medical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Quipt Home displayed solid returns over the last few months and may actually be approaching a breakup point.

Lycos Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lycos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Quipt Home and Lycos Energy

The main advantage of trading using opposite Quipt Home and Lycos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quipt Home position performs unexpectedly, Lycos Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lycos Energy will offset losses from the drop in Lycos Energy's long position.

The idea behind Quipt Home Medical and Lycos Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.